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The ¥4.3 Trillion Japanese Government Earthquake Liability Cap: A Deep Dive Into The Mechanics Of Japanese Earthquake (Re)Insurance

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Sat, 03/12/2011 - 14:35 | 1044733 ZeroPower
ZeroPower's picture

Yup, liquidations they will do! But i propose to you the insurers must be fairly well hedged as well. And plus, theyve been collecting premiums what, over 20 years now?


At least the gov is stepping in: BoJ to provide cash injection into money markets - supplying 2trillion yen (US$24.4billion) a day, for two consecutive days 

Sat, 03/12/2011 - 15:01 | 1044776 goldfish1
goldfish1's picture

pennies on the dollar

Sat, 03/12/2011 - 15:21 | 1044810 Michael
Michael's picture

The only thing I want to know is; Will Japan sell it's US treasury holdings to pay for the cleanup and how much of it?

Sat, 03/12/2011 - 16:03 | 1044906 ZeroPower
ZeroPower's picture

Naw, they shouldn't do anything to offend the US gov (i.e military) in their current help efforts.

Id say a JPY version of QE3. Will be very interesting to see JPY trade (especially against EUR and USD) on Sunday night after initial reaction to the upside which, imo, won't last.

Sat, 03/12/2011 - 16:54 | 1044987 Michael
Michael's picture

It would be a great act of generosity on the part of the US to allow without prejudice,  Japan to use its savings for this most spectacular of rainy days. 

Sat, 03/12/2011 - 14:39 | 1044738 Paul Krugman
Paul Krugman's picture

Hey Tyler Europe just approved (at 1:30 AM) a new rescue package. Any opinion. Looks like more money printing.

Sat, 03/12/2011 - 15:36 | 1044847 NewThor
NewThor's picture

I'm coming out with a global economy saving new invention!

The Ben 'MABUS' Bernanke home printing press!

Short on your Hummer3 payment? Print up a few thousand!

Having trouble getting that Hooters waitress to flirt with you? Print up a couple of hundred!

Are you starving? Print up some $20s and see if you can eat 10,000 calories of Taco Bell in

one sitting!

Do you need a couple of Extra Bucks for a new STAR WARS shoot down arrows with arrows

system or do you want to build a 100 foot wall between America and Mexico? 


If you act now we'll throw in the new Trillion dollar bill plate for free!

'In God we Trust and on the printing press we depend!'

I just copyrighted this idea, so don't steal it jerks!


Sat, 03/12/2011 - 14:53 | 1044763 Oh regional Indian
Oh regional Indian's picture

And this is just the start. The insurance business is such the basis for this scam we are in, financially, globally (any wonder AIG shook the base in 08?), that it is ironical and fitting that this is the undustry (yes, undustury) that will bring the house down.

Warm up phase on now.




Sun, 03/13/2011 - 08:10 | 1046252 Orly
Orly's picture




Sat, 03/12/2011 - 15:00 | 1044770 Atomizer
Atomizer's picture

The echelon is biting down on the foot soldiers to produce. Certain alphabet soup agencies and insurers are tits up.


Creditfixing is not available at moment.



Sat, 03/12/2011 - 15:00 | 1044777 dark pools of soros
dark pools of soros's picture

I don't see any provisions for the relocation of skanks - ask NZ



Sat, 03/12/2011 - 15:06 | 1044782 Rhone_Ranger
Rhone_Ranger's picture

Earthquake coverage provided courtesy of AIG.

Sat, 03/12/2011 - 19:33 | 1045212 RockyRacoon
RockyRacoon's picture

The big news and tragic stories will be how insurance companies are skipping out on payments and shilling the payouts they do make.   Don't think Big Insurance is actually going to do the right thing here.   (Remember New Orleans for the microcosmic view.)

Sun, 03/13/2011 - 00:23 | 1045842 Yen Cross
Yen Cross's picture

Just scrolling Rockie.  I like your posts. Have a good weekend!

Sun, 03/13/2011 - 08:12 | 1046256 Orly
Orly's picture

I imagine Buffett will make a king's ransom here, some way, some how.

Sat, 03/12/2011 - 15:07 | 1044786 davepowers
davepowers's picture

so that means if the residential side losses exceed $64 bn, then the insureds get only a prorated recovery of their damages? right?


Sat, 03/12/2011 - 17:25 | 1045021 lolmao500
lolmao500's picture

Yep. You get screwed...


And what about LIFE INSURANCE? Do people's deaths insurance come in this limit or it's another fund?

Sat, 03/12/2011 - 15:11 | 1044795 Seasmoke
Seasmoke's picture

they will blame it on the water damage and get out of paying


insurance is great to have until you need it.......read the fine print !

Sat, 03/12/2011 - 15:22 | 1044815 Atomizer
Atomizer's picture

Tyler, have a question. Considering oil has been considered a financial instrument within the halls of wall street derivatives market, how will the new Japan Carry Trade play out? Please keep your answer geopolitical & not financial. I can piece together my rabbit hole outcome.

Thank you.

Sat, 03/12/2011 - 15:23 | 1044817 spanish inquisition
spanish inquisition's picture

Good thing Ben has been able to run the printers all weekend long without market interference.

Sat, 03/12/2011 - 15:23 | 1044819 Josh Randall
Josh Randall's picture

Cue North Korean Dictator to rear his head with off the wall behavior to draw attention to himself - wait for it -

Sat, 03/12/2011 - 15:37 | 1044844 AN0NYM0US
AN0NYM0US's picture

The visual summary of the flow of funds in the JER graphic that you posted above bears a striking resemblance to the graphic depicting the BWR reactor at Fuku that you posted in another thread earlier

Sat, 03/12/2011 - 15:42 | 1044855 falak pema
falak pema's picture

Wait till Japan starts selling its USD denominated T-Notes/bonds. To finance the up-coming rehab program. What will that do to the dollar if they unload all those T notes pronto on the market....?

Sat, 03/12/2011 - 15:49 | 1044875 falak pema
falak pema's picture

As you know the Koreans have had a run on their banks. When the USD starts being hit by Yen repumping by Japanese govt. it will send shock ripples through the whole SE asian market. The Yuan will be under pressure as what the yen does to USD exchange rates in not indifferent to China, due to yuan pegging. Uncertain times in the money markets AND the commodity markets, as the oil price goes either way as of next week, under Japan's initial refinery stall and then subsequent nuclear short fall. (I don't know to what extent the nuclear immediate dip can stimulate oil fed electrical generation demand in Japan).

Sat, 03/12/2011 - 15:59 | 1044896 Rogerwilco
Rogerwilco's picture

Tens of billions? Multiply by ten, and then double or triple that number. This is a tough break for the Japanese people, but they will pull together and overcome the hardships.

Sat, 03/12/2011 - 16:04 | 1044905 Quinvarius
Quinvarius's picture

In other words, sell the retirement fund to rent an apartment somewhere now that you home is gone.  At the same time, the government prints more money or dumps US treasuries.

Sat, 03/12/2011 - 16:27 | 1044941 r101958
r101958's picture

Sounds an awful lot like something we should have done with TBTF banks.

Sat, 03/12/2011 - 16:59 | 1044991 max2205
max2205's picture

Homeowners will be hoping for fallout damage payments

Sat, 03/12/2011 - 17:24 | 1045020 thx111
thx111's picture

Japanese life insurance companies holds a lot of US treasuries.  I wonder if those Japanese insurance companies (and Japanese gov. )have to sell some US treasuries to fund their liabilities. 

Sat, 03/12/2011 - 17:37 | 1045038 virgilcaine
virgilcaine's picture

That explains it.. an Enron style insurance policy.. No wonder it blew .

Sat, 03/12/2011 - 18:17 | 1045094 Atomizer
Atomizer's picture

Enron #54


The accounting firm of Arthur Andersen, which employs all types of rogues, was indicted for its role in the Enron scandal.


Bring out the old and cross your fingers it works this time around

PriceWaterhouseCoopers Ad





We serve your needs to bury the bones

Sat, 03/12/2011 - 17:48 | 1045051 strannick
strannick's picture

Hope Buffet has some of these policies

Sat, 03/12/2011 - 18:06 | 1045078 KickIce
KickIce's picture

Average Joe gets the shaft once again.

Individual policy and collective liability with a limit.

Sat, 03/12/2011 - 21:08 | 1045330 PulauHantu29
PulauHantu29's picture

You can forget all contract law, and all Japanese statues. Look how well the "cap" worked for BP.

The Japanese government will pay 100% + for damages and The Bernank will kick in a few Trillion imho.

Sun, 03/13/2011 - 06:53 | 1046193 The Alarmist
The Alarmist's picture

Correctamundo ... politics just doesn't work that way, and you can count on "all bets being off" as the losses are so widespread that the only way out is to socialise them across the whole nation ... unless, of course, the Fed steps up to underwrite them (given their history, it could be that all bets are not off).

Sat, 03/12/2011 - 21:35 | 1045366 lolmaster
lolmaster's picture

In other words ... QE just went nuclear.

Sat, 03/12/2011 - 22:02 | 1045398 Milstar
Milstar's picture

No disrespect Tyler but Jefferies said it was only 10 billion in damages.  I don't think they have any reason to lie about that well researched number.

Sun, 03/13/2011 - 04:03 | 1046119 robertocarlos
robertocarlos's picture

When we get hit by a big asteroid I will expect a cheque.

Sun, 03/13/2011 - 06:54 | 1046194 The Alarmist
The Alarmist's picture

You will get that check, but first we will need to pump more money into the banks again so we can write it and you can cash it.

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